Boeing asks airlines worldwide to inspect aircraft

Ethiopian Airlines was the first airline to resume flying the Boeing 787 (pictured prior to an April takeoff) that were grounded worldwide earlier this year due to battery problems.

STORY HIGHLIGHTS

• Boeing asks airlines to inspect planes equipped with Honeywell emergency locators
• UK investigators say transmitter likely to blame for 787 fire at Heathrow this month
• In U.S., Boeing faces $2.75 million FAA penalty

(CNN) -- As part of Boeing's ongoing efforts to resolve Dreamliner problems, the passenger jet maker has put out a request that airlines inspect an emergency beacon used to find aircraft in the event of a crash.

The request is based on a recommendation by the United Kingdom's Air Accidents Investigation Branch (AAIB) following a fire aboard an Ethiopian Airlines 787 Dreamliner parked at London's Heathrow Airport on July 12.

The fire caused extensive damage to the rear of the aircraft.

No one was hurt but the incident shut runways for about an hour before operations resumed, the airport said.

Randy Tinseth, vice president marketing for Boeing Commercial Airplanes, said in a statement that in addition to the 787, the company has also asked operators of 717, Next-Generation 737, 747-400, 767 and 777 airplanes to inspect aircraft.

"We're taking this action following the UK AAIB Special Bulletin, which recommended that airplane models with fixed Honeywell ELTs be inspected," he said.

"The purpose of these inspections is to gather data to support potential rule-making by regulators."

The AAIB said the emergency locator transmitter (ELT) -- which uses its own battery to send details of a plane's location in the event of a crash -- is now the focus of its investigation.

"Detailed examination of the ELT has shown some indications of disruption to the battery cells," said the AAIB bulletin.

"It is not clear however, whether the combustion in the area of the ELT was initiated by a release of energy within the batteries or by an external mechanism such as an electrical short."

Despite troubles, customer demand for the Dreamliner has remained solid.

'Airworthiness Directive' expected

Distancing Boeing from the malfunction, Tinseth said "it's important to note that Honeywell ELTs have been deployed on approximately 20 aircraft models -- including Boeing, Airbus and numerous business aviation aircraft."

Honeywell, the maker of the emergency beacon, said it had no knowledge of any problem with its emergency transmitter, certified by the Federal Aviation Authority since 2005.

Last week, the U.S. Federal Aviation Administration (FAA) instructed airlines operating the 787 to remove or inspect the Honeywell ELTs.

"The FAA is preparing to issue an Airworthiness Directive in the coming days that would make these inspections mandatory," said the FAA statement, released July 20. "Federal Aviation Regulations do not require large commercial aircraft in scheduled service to be equipped with these devices."

The investigations come little more than two months since the Dreamliners were allowed back in the air following a retrofit to fix an issue with its lithium-ion batteries.

Customer demand for the super-efficient airliner has remained solid despite the grounding earlier this year.

Boeing has delivered 68 of the planes to 13 airlines and has 862 unfilled orders.

It says it plans to increase production to 10 per month by the end of the year, double the rate earlier this year.

Meanwhile, Boeing is facing a possible US$2.75 million civil penaltyfor allegedly using certain parts in 777 construction that did not meet standards and repeatedly missing deadlines to address related quality control issues.

The FAA proposed the fine, saying Boeing's commercial aircraft division took more than two years to fully address problems after learning about quality control gaps involving fasteners in 777 construction.

CNN's Michael Martinez, Thom Patterson, Mike M. Ahlers and Mark Thompson contributed to this report.

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Africa Oil says speeds up E. Africa exploration, drills new well | Reuters

Canadian explorer Africa Oil Corp said on Thursday it had begun drilling a new well in Kenya with its British partner Tullow Oil Plc, as the two companies speed up exploration efforts in the east Africa region.

East Africa has become a hotbed of exploration after oil discoveries in Kenya and Uganda and huge gas finds in Tanzania and Mozambique. However, Kenya has yet to determine whether it has commercially viable quantities of hydrocarbons.

Drilling of the Ekales-1 well, located within Kenya's Lokichar basin, started on Monday. Its planned depth is 2,500 metres and it would take approximately two months to drill and evaluate its content, Africa Oil said.

"The Ekales prospect is probably one of the lowest risk prospects in our inventory. The proximity and similarity to the existing Ngamia and Twiga discoveries give us a high degree of confidence that we will find oil and continue to build the discovered resources necessary for commercial volume threshold," Keith Hill, Africa Oil's chief executive, said in a statement.

Earlier this month, Tullow said it saw a flow rate potential of 5,000 barrels a day based on Ngamia-1 and Twiga-South-1, and estimated combined mean associated resources for the discoveries were 250 million barrels of oil, a forecast it said could increase further after appraisal.

The Ekales-1 prospect is located approximately 15 km northwest of the Ngamia discovery and 7 km south of the Twiga discovery, Africa Oil said.

Ekales-1 on onshore block 13T is a joint venture between Tullow, the well operator with 50 percent of the exploration licence, and Africa Oil.

Buoyed by oil finds in Kenya's Ngamia, Twiga and Etuko wells, Hill said Africa Oil and Tullow Oil planned to speed up their exploration efforts in the east Africa region, including the Horn of Africa.

"Our pace of exploration and appraisal continues to accelerate with the anticipated arrival of three additional rigs in Kenya and Ethiopia in the next 60 days for a total of six rigs, four of which will be operated by Tullow Oil," he said.

"The recently announced Etuko discovery, on the flank of the Lokichar basis has opened a new play fairway and provided further confirmation of the world class potential of the Lokichar Basin."

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Africa Oil Corp discovers oil in Kenya and viable hydrocarbons in Ethiopia

The Canadian oil and gas company added that the testing programme at the Ngamia-1 oil discovery on Block 10BB in Kenya successfully spud over 3,200 bpd. (Image source: Hrald/Wikimedia Commons)Africa Oil Corp has announced that oil has been discovered at the Ngamia-1 well in Kenya and that Ethiopia’s Sabisa-1 well has confirmed a viable hydrocarbon system

Th Ngamia-1 well, situated on the Etuko Prospect in Block 10BB, is located on the eastern side of the Kenyan basin. The Canadian oil and gas company said that the testing programme at the well successfully spud over 3,200 bpd from six drill stem tests (DST). With optimised completion techniques and surface equipment, it is estimated that these combined flow rates are likely to increase to a rate of 5,400 bpd.

The well is currently being drilled in the Lower Lokhone sands and results from this lower section are expected by the end of July 2013, company sources added.

Five of the DSTs were completed over the Auwerwer sandstones to verify reservoir quality and fluid content which appear to be of similar quality to those tested at the Twiga South-1 well in the same basin.

High-quality waxy sweet crude was flowed from all five zones in the Auwerwer formation with good quality reservoir sands encountered. All zones produced dry oil with no water produced and no pressure depletion. One DST was earlier completed on the Lower Lokhone with successful results.

Tullow Oil, the field's operator, has reported that Ngamia and Twiga oilfields are believed to contain more than 250mn barrels of recoverable oil. Appraisal work, including the acquisition of 3D seismic and the drilling of appraisal wells on both discoveries, will be undertaken over the next year to confirm these estimates, the firm added.

Keith Hill, CEO of Africa Oil Corp, said, “We are very pleased with the results of the Ngamia-1 testing programme which has confirmed the productivity of both the Lower Lokhone reservoir and the high quality Auwerwer reservoir and significantly increased the net pay in the well. This encouragement has caused us to set in motion appraisal of the Ngamia-Twiga trend and to assemble a technical team to commence early development planning both for a large scale pipeline development and an early development scheme.

“The Etuko discovery also opens up a new fairway on the eastern flank play in Lokichar where a number of other large scale prospects have been identified.”

Africa Oil Corp also stated that the Sabisa-1 well in Ethiopia confirmed a viable hydrocarbon system. The well was drilled on the South Omo Block in the northern portion of the Turkana Basin, 300km north of the Ngamia and Twiga discoveries, to a total depth of 2,082 metres.

The well encountered reservoir quality sands, oil shows and heavy gas shows indicating an oil prone source rock and a thick shale section.

Hill added, “The Sabisa results are also highly encouraging as all the major components for oil accumulation appear to have been proven in one of our largest and most prospective frontier basins in the portfolio. The second half of 2013 promises to be an exciting and transformational period in the growth history of the company.”

The OGEC 75 rig move has been initiated and a late Q3 2013 spud is expected. Numerous additional follow-up prospects have been mapped in this part of the South Omo Block and in the adjacent Chew Bahir Basin, the CEO noted.

Meanwhile, preparations are currently underway to drill both Kenya’s Block 9 Bahasi Prospect and the Ethiopia’s Ogaden Basin Block 8 El Kuran Prospect.

Bank sees China, Ethiopia as good fit |Last Word |chinadaily.com.cn

By Li Lianxing ( China Daily)

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Guang Z. Chen says he believes the World Bank's cooperation with Chinese companies could improve Africa's development. Li Lianxing / China Daily

New partnership aims to remove obstacles to foreign investment in promising African nation

Ethiopia is attracting significant Chinese foreign direct investment, but has still been lagging in overall FDI. However, an official from the World Bank says a partnership between the bank and Chinese companies will help remove obstacles that have been preventing Ethiopia from becoming one of Africa's most attractive destinations for investment.

Guang Z. Chen, country director for Ethiopia at the World Bank, says the bank is a major player in Africa, providing local soft financing and bringing in knowledge-based services and technical assistance. Chen believes the bank's cooperation with Chinese companies could greatly improve Africa's development.

"Chinese partners have a relatively small presence in and knowledge of this continent, and their involvement in the past has to a certain degree attracted criticism over labor abuse and pollution," he says. "But if we can cooperate, the World Bank has the capacity to make Chinese companies better informed and therefore help them maintain international standards."

He says the bank will leverage more funding to help Africa and China pool critical resources to improve the continent's development.

"For instance, a survey we conducted in 2012 regarding Chinese FDI in Ethiopia is a very good example of how we can use our experience to give Chinese companies proper guidance, while also suggesting to host governments ways they can attract more investment," he says.

"Considering China has an export-oriented economy, a developed and prosperous Africa could offer a large market to ensure China's continued development. A better relationship will be good for both sides and our bank is willing to facilitate that."

The World Bank surveyed 69 Chinese enterprises doing business in Ethiopia in mid-2012 and released a report in November.

"As the largest trading partner with Ethiopia in 2011, China's sample was representative," he says. "Identifying and addressing obstacles could help Ethiopia to take better advantage of foreign investors."

The survey showed that there are four main drivers of Chinese FDI in Ethiopia: a good understanding of the investment climate gained from entrepreneurs' social networks, perceived opportunities provided by the current state of the Ethiopian economy, cross-border investment incentives provided by the Ethiopian and Chinese governments and the attractions of stable political environments such as Ethiopia's.

"But there are also some obstacles that have dampened enthusiasm to invest in Ethiopia," Chen says. "Among the top concerns are trade regulation and customs clearance efficiency, perceived risks due to foreign exchange rates, inconsistent and inefficient taxation, as well as government regulations affecting business efficiency.

"It's very interesting that corruption was not a major concern for Chinese investors in Ethiopia, whereas in other countries corruption is a major deterrent to FDI. So if the government in Ethiopia can continue to improve its investment environment, China and other partners will see it as an attractive business destination."

Chen says that Ethiopia's economic model is based on state intervention, but it's not a completely state-planned economy. Governments in Asian countries such as China, South Korea, Vietnam or Malaysia, play similarly dominant roles in their economies.

He says at this stage, relying solely on the private sector might not be the most effective way to develop a country. This kind of model shouldn't be judged by ideology because it increased the average GDP from 1 or 2 percent between 1950 and 2002 to nearly 10 percent during the past decade.

"But it's a process that will evolve into a development model in which the private sector and small and medium-sized corporations will play a bigger role, as the government has limited effects on the economy and the country should walk on 'two legs'," Chen says.

He believes this is because, although the country can mobilize resources for state construction at certain times, it has to ensure that economic growth is sustainable.

"Ethiopia must create an environment that fosters its private sector and smaller corporations, and also attracts foreign direct investment," he says.

"Ethiopia's endowment is different from many other African because it is based on natural resources and its labor force. Thus, creating jobs is critical for future development."

Chen says China could play a significant role in this regard as the two countries' requirements complement each other.

"Labor and land costs in China are getting increasingly expensive, which means profit margins are shrinking swiftly," he says. "Some manufacturers only make 5 percent profit when producing goods in China. But the costs of labor, land, energy and raw materials in Ethiopia are much lower than in China. For instance, labor costs in Ethiopia are one-sixth to one-eighth of those in southern China's Guangdong province."

Labor-intensive industries are one area where the development needs of Ethiopia and China can fit, as it doesn't make any difference to the Chinese where their goods are made.

"But there are also invisible costs for foreign investors, especially exceptionally high logistics expenses, infrastructure limitations that cannot ensure factories' normal operations, poor transport and relatively low labor skills," he says.

However, according to Chen, these are gaps that can be bridged as moving factories from China to Africa is still a win-win approach for both sides.

"China is facing tightened customs regulations and quotas when exporting goods to the rest of the world, but Ethiopia doesn't have this problem," Chen says. "And Ethiopia needs to attract FDI to upgrade its economic structure by shifting production from East Asian countries to its own factories."

During one of his visits to South China's Pearl River Delta, which has the most factories of any region in China, Chen notes that Africa is still far from the first choice of Chinese companies that are considering moving manufacturing operations overseas. They still prefer South Asian and Southeast Asian countries.

"The late prime minister Meles Zenawi also told me of his confusion when, after several promotional tours overseas, Ethiopia's appeal as a destination for FDI did not impress many investors," Chen says.

"This was why the World Bank decided to conduct a survey within the existing Chinese business community in Ethiopia to find out about the obstacles and challenges of doing business in this country."

lilianxing@chinadaily.com.cn

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